[Click eStock] "BGF Retail, Performance Slump Passed Peak, Buy Approach Possible from Mid-Long Term Perspective... Target Price Up"

[Asia Economy Reporter Eunmo Koo] There is an analysis that the peak of BGF Retail's poor performance has passed, making it possible to approach buying from a mid- to long-term perspective.

KB Securities maintained its "Buy" rating on BGF Retail and raised the target price from 173,000 KRW to 180,000 KRW. In a report on the 18th, Shin-ae Park, a researcher at KB Securities, explained, "Although the weighted average cost of capital (WACC) rose from 6.31% to 7.55% due to an increase in the market risk premium, the estimated average annual growth rate of operating profit over the next six years was revised upward from 7.2% to 8.9%."

She added, "Although the novel coronavirus disease (COVID-19) is still spreading, expectations for the commercialization of vaccines and treatments are rising, leading to increased stock market interest in industries that can significantly improve performance in the 'post-COVID' era," and forecasted, "The convenience store sector is expected to show meaningful profit improvement this year, supported by improved operating conditions and a low base effect."

It is estimated that consolidated sales will grow by 7% this year, and operating profit will increase by 35%. Researcher Park explained, "This is because same-store sales are expected to recover due to the low base effect and sales improvements at university-area stores as school attendance normalizes." Additionally, due to the continued strong demand for convenience store startups, which highlights sales stability, net store additions are estimated to reach 880. Researcher Park projected, "With same-store sales returning to growth, the food sales ratio expanding again, and rent costs decreasing, the operating profit margin is expected to improve by 0.7 percentage points compared to the previous year."

This content was produced with the assistance of AI translation services.